Equities Sector Coverage: Wall Street Tests New Highs

Sector Recap |

Wall Street Bulls EyeOn Tuesday Greece received a commitment to a $170 billion bailout but stocks slipped on the news. Dow Futures were up 72 points on Monday with NASDAQ Futures up 10.5 points, but these levels were not sustained at Tuesday’s open. The Dow Jones Industrial Average traded up to 13,005.04, but traded as low as 12,926.11 in afternoon trading. The NASDAQ rebounded to 2965.05 but traded as low as 2934.07 in afternoon trading. The S&P 500, Dow Transports and Russell 2000 continue to lag their 2011 highs at 1370.58, 5627.85 and 868.57 respectively.

Asian stocks were mixed on Monday with the Nikkei 225 ending their session 9,485 – up 1.08% on the day. The Hang Seng closed at 21,425 – down 0.31% on the day. Then on Tuesday, Japan reported a record trade deficit and the Nikkei 225 ended Tuesday at 9,463 – down 0.23%. The Hang Seng ended Tuesday at 21,479 – up 0.25%. European stocks were also higher on Monday in anticipation of the Greek bailout. The FTSE 100 ended their session at 5,945 – up 0.68% on Monday; the DAX ended their session at 6,948 up 1.46% on Monday; and the CAC 40 ended their session at 3,473 – up 0.96% on Monday.

The FTSE 100 ended Tuesday at 5,928 – down 0.29%; the DAX ended Tuesday at 6,908 - down 0.58%; and the CAC 40 ended Tuesday at 3,465 – down 0.21%. The US Treasury market was closed on Monday. On Tuesday the yield on the 10-Year US Treasury rose to 2.080 trending above its 50-day simple moving average at 1.940. Gold rose to $1739.0 the Troy ounce on Monday then tacked onto that gain to $1759.5 on Tuesday. Crude oil traded up to $105.44 per barrel on Monday and that rally continued to $106.07 on Tuesday. The euro versus the dollar rallied to 1.3292 on Tuesday.

Energy

URS Corp (URS) agreed to buy Canadian oilfield services company Flint Energy Services (FESVF) for C$1.25B ($1.25B) (C$25/share – a 68% premium). Frontline (FRO) is increased to Outperform from Market Perform at FBR Capital.
Energy Select Sector SPDR (XLE) was trading at $75.38 at 4:00 PM on Tuesday, up 0.68% on the day – up 9.04% year-to-date. The January change was +2.26%. The 2011 change was -1.29%

Big Movers: WFT (-12.5%), FRO (+7.5%), CJES (+7%)

Materials

Hecla Mining (HL) reported Q4 EPS of $0.07 (in-line), while beating revenue by $4M. Walter Industries (WLT) missed estimates by 25 cents and revenue by $36M. The company reports prelim Q4 pre-tax income of $254M, or $352M after excluding pre-tax losses of $98M and revenue of $3.71B. Sappi Limited (SPP) is upgraded to Outperform from Neutral at Credit Suisse.
The Materials Select Sector SPDR (XLB) was trading at $37.59 at 4:00 PM on Tuesday, up 0.59% on the day – up 12.21% year-to-date. The January change was +10.99%. The 2011 change was -12.78%.

Big Movers: HL (+11.75%), SWC (8.25%)

Industrials

Airline shares fell broadly on Tuesday as the price of oil rallied, which directly influences the cost of jet fuel. URS Corp (URS) agreed to buy Canadian oilfield services company Flint Energy Services (FESVF) for C$1.25B ($1.25B) (C$25/share – a 68% premium). Dollar Thrifty Automotive Group (DTG) beat estimates by 34 cents with revenue in-line with estimates. Q4: Vehicle rental revenue up 1%, led by a 5.2% increase in rental days that partially offset a 4% decline in revenue per day. The company expects full year 2012 EPS to fall in a range of $4.60-$5.20 based on an improving U.S. travel market. Pentair (PNR) is added to Citigroup’s list of Top Picks Live. General Electric (GE) is removed from Citigroup’s Top Picks Live List. Norfolk Southern (NSC) and rival CSX Corp (CSX) are both reduced to Neutral from Overweight at JP Morgan.

The Industrial Select Sector SPDR (XLI) was trading at $37.41 at 4:00 PM on Tuesday, up 0.35% on the day – up 10.84% year-to-date. The January change was +7.32%. The 2011 change was -3.21%.

Big Movers: LCC (-12.5%), UAL (-11.5%), DAL (-11.25%), JBLU (-9.75%)



Consumer Discretionary

China's clampdown on automobile overcapacity is good news for companies like GM (GM) which already have entrenched positions in the world's biggest car market. Barnes & Noble (BKS) reported FQ3 EPS of $0.71 (versus consensus of $0.96), while missing revenue by $90M. Clear Channel Outdoor (CCO) missed estimates by 4 cents with revenue in-line with estimates. Macy's (M) Q4: Operating income jumped 12% Y/Y to $1.28B. Online sales +4% Y/Y. Sees same-store sales growth of approximately 3.5% in 2012 and EPS falling in range of $3.25 to $3.30. Saks (SKS) beat estimates by 3 cents with revenue in-line with estimates. Dana Holding (DAN) beat estimates by 4 cents with revenue in-line with estimates. Cracker Barrel (CBRL) beat estimates by 7 cents and revenue by $15M. Boyd Gaming (BYD) missed estimates by 2 cents, while beating revenue by $9M. RadioShack (RSH) reported Q4 EPS of $0.12 (in-line) on revenue of $1.39B (in-line). Home Depot (HD) beat estimates by 7 cents and revenue by $500M. Q4: Comparable store sales were 5.7%, with U.S. stores increasing sales at 6.1%. The company sees sales growth in 2012 of 4%, with low single-digit sales gains in comparable stores. Dangdang (DANG) gets increased to Outperform from Neutral at Credit Suisse. Garmin (GRMN) is upgraded to Outperform from Market Perform at Avondale. Limited (LTD) is now Neutral from Positive at Susquehanna. Marriott International (MAR) is moved to Neutral from Overweight at Atlantic Equities. Host Hotels (HST) is now Equal Weight from Overweight at Morgan Stanley. Under Armour (UA) is now Hold from Buy at Needham.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.81 at 4:00 PM on Tuesday, down 0.35% on the day – up 9.71% year-to-date. The January change was +5.89%. The 2011 change was +4.30%.

Big Movers: BYD (-8.75%), RSH (-8.25%)

Consumer Staples

Wal-Mart (WMT) said yesterday that it had lifted its stake in Chinese e-commerce firm Yihaodian to around 51% as the company angles for a larger presence in China's fast-growing consumer market. Kraft's (KFT) Q4: Organic net revenues grew 6.1%, led by higher pricing across segments and significant contributions from new products. The company expects Organic net revenue growth of approximately 5% in 2012, with EPS growing at least 9%. Wal-Mart (WMT): Q4 comparable store sales +1.5%, +0.2% for the year. Full-year stock repurchases of $6.3B. The company issued Q1 EPS guidance of $1.01-1.06 vs. $0.98 previous year and FY2013 EPS guidance of $4.72-4.92 vs. $4.90 expectations. Heineken (HINKY) gets a Hold-from-Sell hoist at Société Générale.

The Consumer Staples Select Sector SPDR (XLP) was trading at $32.87 at 4:00 PM on Tuesday, down 0.57% on the day – up 1.17% year-to-date. The January change was -1.42%. The 2011 change was +10.85%.

Big Movers: FEED (+45%), PBH (+22%).

Health Care

Pfizer (PFE) is exploring partnerships with more Chinese drug companies as it tries to expand its marketshare in generic drugs, and reported progress over the weekend in a planned JV with China's Zhejiang Hisun Pharmaceutical. Medtronic (MDT) reported FQ3 EPS of $0.84 (in-line), while missing revenue by $70M. Mylan Laboratories (MYL) beat estimates by 3 cents with revenue in-line with estimates. Cumberland Pharmaceuticals (CPIX) is moved to Outperform from Market Perform with Wells Fargo. Life Technologies (LIFE) is lifted to Buy from Neutral at Citigroup. Pharmacyclics (PCYC) is upgraded to Outperform from Sector Perform at RBC Capital. Gilead Sciences (GILD) is lowered to Equal Weight from Overweight at Barclays.

The Health Care Select Sector SPDR (XLV) was trading at $35.98 at 4:00 PM on Tuesday, down 0.72% on the day – up 3.72% year-to-date. The January change was +3.20%. The 2011 change was +10.32%.

Big Movers: CORT (+48.5%), GTXI (-33.75%), VVUS (-9.5%)

Financials

Chesapeake Lodging Trust (CHSP) is raised to Outperform from Sector Perform at RBC Capital. Unum Group (UNM) is moved to Overweight from Neutral at JP Morgan.

The Financial Select Sector SPDR (XLF) was trading at $14.775 at 4:00 PM on Tuesday, down slightly on the day – up 13.65% year-to-date. The January change was +8.12%. The 2011 change was -18.50%; the weakest performing sector for the year.

Big Movers: RDN (+8%)
Heavily Traded Stocks: BAC (+2.1%), C (+1.5%), WFC (+0.7%), JPM (+0.75%)

Information Technology

Reliance Communications is reportedly in talks with four companies about a possible $3B contract to manage its mobile phone networks, with a finalized contract expected in the next six weeks. The companies include: Ericsson (ERIC), Alcatel-Lucent (ALU), ZTE Corp. (ZTCOF) and Huawei Technologies. Samsung (SSNLF) announced plans to spin off its unprofitable LCD business to focus on more profitable areas such as smartphones, non-memory chips, and next-generation panels. Advanced Energy Industries (AEIS) is now Buy from Neutral at Citigroup. MicroStrategy (MSTR) is moved to Market Perform from Underperform by brokerage Raymond James. Oracle (ORCL) is moved to Market Perform from Market Outperform at JMP Securities. Lam Research (LRCX) and KLA-Tencor (KLAC) are each now Neutral from Overweight at JP Morgan. Infosys (INFY) is cut to Neutral from Outperform at Credit Suisse. OmniVision (OVTI) is lowered to Neutral from Buy at Lazard.

The Technology Select Sector SPDR (XLK) was trading at $28.64 at 4:00 PM on Tuesday, up 0.42% on the day – up 12.53% year-to-date. The January change was +6.21%. The 2011 change was +1.03%.

Big Movers: ENER (-21%), PWAV (+14.25%), FFN (+10.25%)

Telecommunication Services

The NASDAQ Telecommunications Index (IXTC) was trading at $218.63 at 4:00 PM on Tuesday, down 0.19% on the day – up 11.02% year-to-date. The January change was +6.67%. The 2011 change was -12.62%.

Heavily Traded: FTR (-3.75%), T (1.1%), S (flat), VZ (flat), CTL (+0.5%)

Utilities

The Utilities Select Sector SPDR (XLU) was trading at $34.92 at 4:00 PM on Tuesday, down 0.37% on the day – down 2.95% year-to-date. The January change was -3.61%. The 2011 change was +14.81%; the strongest performing sector for the year.

Heavily Traded: DUK (flat), GEN (+0.9%), EXC (-0.6%). NVE (-2.25%), AES (+0.4%), CNP (+0.2%)

STOCKS: URS, FESVF, FRO, WFT, CJES, HL, WLT, SPP, SWC, DTG, PNR, GE, CSX, LCC, UAL, DAL, JBLU, GM, BKS, CCO, M, SKS, DAN, CBRL, BYD, RSH, HD, DANG, GRMN, LTD, MAR, HST, UA, WMT, KFT, HINKY, FEED, PBH, PFE, MDT, MYL, CPIX, LIFE, PCYC, GILD, CORT, GTXI, VVUS, CHSP, UNM, RDN, BAC, C, WFC, JPM, ERIC, ALU, ZTCOF, SSNLF, AEIS, MSTR, ORCL, LRCX, KLAC, INFY, OVTI, ENER, PWAV, FFFN, FTR, T, S, VZ, CTL, DUK, GEN, EXC, NVE, AES, CNP

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
SPP SNMP Sanchez Production Partners LP n/a n/a n/a n/a
ORCL Oracle Corporation 44.10 1.00 2.32 30,594,322 Trade
GEN Genesis Healthcare Inc. 2.75 0.16 6.18 2,780,556 Trade
FTR Frontier Communications Corporation 6.54 -0.16 -2.39 6,188,774 Trade
CJES C&J Energy Services Ltd. n/a n/a n/a n/a
UAL United Continental Holdings 72.94 -1.48 -1.99 3,980,190 Trade
GE General Electric Company 13.05 0.29 2.27 74,119,111 Trade
CORT Corcept Therapeutics Incorporated 16.06 -0.48 -2.90 2,000,002 Trade
CHSP Chesapeake Lodging Trust of Beneficial Interest 32.49 0.42 1.31 561,174 Trade
SWC Stillwater Mining Company ($0.01 Par Value) n/a n/a n/a 0 Trade
WMT Walmart Inc. 84.82 0.61 0.72 11,005,783 Trade
CSX CSX Corporation 64.78 0.73 1.14 8,645,650 Trade
CNP CenterPoint Energy Inc (Holding Co) 26.62 0.10 0.38 3,470,502 Trade
UEIC Universal Electronics Inc. 31.15 0.55 1.80 610,995 Trade
BYD Boyd Gaming Corporation 36.58 -0.19 -0.52 680,135 Trade
GRMN Garmin Ltd. 60.23 0.11 0.18 945,959 Trade
C Citigroup Inc. 67.20 -0.43 -0.64 16,337,261 Trade
S Sprint Corporation 5.50 0.15 2.80 19,428,061 Trade
DAL Delta Air Lines Inc. 52.72 -1.01 -1.88 11,051,330 Trade
RDN Radian Group Inc. 16.75 -0.45 -2.62 2,795,104 Trade
DAN Dana Incorporated 20.88 -0.01 -0.05 3,552,544 Trade
GILD Gilead Sciences Inc. 71.07 -0.45 -0.63 6,118,885 Trade
UA Under Armour Inc. Class C 20.79 -0.29 -1.38 3,344,183 Trade
CCO Clear Channel Outdoor Holdings Inc. Class A 4.65 0.00 0.00 732,457 Trade
AEIS Advanced Energy Industries Inc. 60.85 0.43 0.71 490,510 Trade
JPM JP Morgan Chase & Co. 105.75 -1.76 -1.64 19,938,788 Trade
LRCX Lam Research Corporation 174.70 -1.35 -0.77 2,950,348 Trade
BKS Barnes & Noble Inc. 6.45 0.25 4.03 1,851,253 Trade
ERIC Ericsson 7.77 0.06 0.78 2,137,962 Trade
AES The AES Corporation 12.86 -0.03 -0.23 7,981,058 Trade
PNR Pentair plc. 42.57 0.42 1.00 2,619,028 Trade
JBLU JetBlue Airways Corporation 18.98 -0.29 -1.50 6,332,443 Trade
MAR Marriott International 132.61 -1.12 -0.84 1,813,937 Trade
VZ Verizon Communications Inc. 49.76 1.13 2.32 40,979,879 Trade
MSTR MicroStrategy Incorporated 131.15 -1.31 -0.99 239,180 Trade
M Macy's Inc 37.43 -1.89 -4.81 7,849,802 Trade
GM General Motors Company 41.25 0.13 0.32 9,565,924 Trade
MDT Medtronic plc. 86.81 0.51 0.59 5,573,760 Trade
HST Host Hotels & Resorts Inc. 21.42 -0.21 -0.97 6,995,150 Trade
BAC Bank of America Corporation 28.99 -0.30 -1.02 77,348,906 Trade
DANG E-Commerce China Dangdang Inc. American Depositary Shares each representing five Class A n/a n/a n/a 0 Trade
GTXI GTx Inc. 17.30 -1.19 -6.44 726,961 Trade
WFT Weatherford International plc (Ireland) 3.33 0.12 3.74 20,139,848 Trade
OVTI OmniVision Technologies Inc n/a n/a n/a 0 Trade
HL Hecla Mining Company 3.87 0.04 1.04 3,316,061 Trade
CTL CenturyLink Inc. 18.62 0.17 0.92 8,422,374 Trade
VVUS VIVUS Inc. 0.73 -0.06 -7.29 799,231 Trade
UNM Unum Group 37.99 0.11 0.29 2,693,999 Trade
CPIX Cumberland Pharmaceuticals Inc. 6.11 0.11 1.83 16,708 Trade
FRO Frontline Ltd. 6.36 0.40 6.71 1,575,031 Trade
HD Home Depot Inc. (The) 197.41 -2.90 -1.45 7,067,329 Trade
PFE Pfizer Inc. 36.51 0.21 0.58 26,613,610 Trade
ALU Alcatel-Lucent ADR (Sponsored) n/a n/a n/a 0 Trade
WFC Wells Fargo & Company 53.94 -0.43 -0.79 24,542,020 Trade
KLAC KLA-Tencor Corporation 106.56 -3.75 -3.40 2,896,037 Trade
PBH Prestige Brand Holdings Inc. 38.13 0.32 0.85 1,824,297 Trade
LIFE aTyr Pharma Inc. 1.15 -0.02 -1.71 786,016 Trade
CBRL Cracker Barrel Old Country Store Inc. 166.39 2.03 1.24 285,068 Trade
EXC Exelon Corporation 41.50 0.07 0.17 5,138,103 Trade
INFY Infosys Limited American Depositary Shares 18.72 0.49 2.69 8,158,227 Trade
T AT&T Inc. 31.69 0.09 0.28 63,900,036 Trade
DUK Duke Energy Corporation (Holding Company) 77.43 0.52 0.68 3,281,154 Trade
MYL Mylan N.V. 38.31 -0.32 -0.83 4,842,081 Trade

Comments

Emerging Growth

Margaux Resources Ltd.

Margaux Resources Ltd is a Calgary based resource company. The Company is focused on its Jersey Emeral Tungsten-Zinc property located in the southeast portion of British Columbia.